A couple letting their home on Airbnb without consent needed to remortgage quickly. A five-minute check of the title register stopped an application that was bound to fail, before they had paid a penny in fees.
The Client
Gary and Lisa owned a three-bedroom detached house in a village near the Norfolk coast, bought with a residential mortgage from a high street lender. Their five-year fixed rate had around two years left to run.
When they moved to be closer to family, they kept the house and began letting it on Airbnb. They had not asked their lender for permission, assuming it was a private matter as long as the payments were made.
The Objective
Their lender became aware the property was being let to holidaymakers. It wrote to Gary and Lisa explaining that this breached their mortgage terms, and asked them either to stop letting or to move to a suitable mortgage within a set period.
Gary and Lisa contacted Drake wanting a holiday let remortgage as quickly as possible, so they could carry on letting and put things right with their lender.
The Complication
There was pressure to move fast.
Even so, before discussing lenders or asking the couple to commit to any fees, Drake asked them to download the title register for the property from HM Land Registry and send it across.
The house was built in the 1970s as part of a small estate. The title register carried restrictive covenants set by the original developer, still binding on every owner today:
- “Not to use the property other than as a single private dwellinghouse”
- “Not to carry on any trade or business upon the property”
Holiday letting is generally treated as running a business from the property.
Holiday let lenders review the title as part of their legal checks, and covenants like these lead to an automatic decline, with no appeal or workaround at application stage.
How We Assessed Options
With holiday letting effectively ruled out by the title, Drake compared the routes still open to the couple.
| Holiday let remortgage | Long-term letting with Consent to Let | |
| Fits the covenants | No, holiday letting treated as business use | Solicitor advised a standard tenancy was unlikely to breach them |
| Early Repayment Charges | Payable, as the fixed rate had two years left | None, existing mortgage stays in place |
| Upfront costs | Valuation, arrangement and legal fees | Lender’s consent fee only |
| Satisfies the existing lender | Yes, if it completed | Yes, once short lets stopped and consent was granted |
| Overall | Ruled out before any fees were paid | Identified as the right route |
Step 1: A holiday let remortgage
This was what Gary and Lisa had asked for, but the covenants meant any holiday let lender would decline once its solicitor reviewed the title. On top of that, redeeming their mortgage would trigger Early Repayment Charges. Because the title had been checked first, the idea was ruled out before any valuation, arrangement or legal fees were paid.
Step 2: Dealing with the covenants
Drake explained the options for the covenants themselves. Indemnity insurance is not usually accepted by holiday let lenders for a covenant restricting how a property is used, and is harder to obtain once the covenant has already been breached. Applying to the Upper Tribunal to change or remove the covenants would take many months, cost a significant amount, and offer no guarantee. Neither fitted the timescale their lender had set.
Step 3: Switching to long-term letting
The couple’s solicitor advised that letting the house on a standard assured shorthold tenancy, as a family home for a tenant, was unlikely to breach the covenants. That opened two possibilities: Consent to Let from their existing lender, or a buy-to-let remortgage.
Identifying the Right Route
Drake identified that the most cost-effective route was to stop the short lets, move to a long-term tenancy, and ask their existing lender for Consent to Let on that basis. This kept their current fixed rate, avoided Early Repayment Charges and meant no new mortgage application at all.
A buy-to-let remortgage was kept in reserve in case the lender declined, with the timing planned around the end of their fixed rate.
The Outcome
Gary and Lisa honoured their existing Airbnb bookings, took no new ones, and contacted their lender with their plan. The lender granted Consent to Let for a long-term tenancy, for a modest fee, and confirmed the matter was resolved.
A local letting agent found a tenant within six weeks. The couple kept their mortgage, their rate and their rental income, and spent nothing on an application that could never have succeeded.
Key lessons
- Letting a property on a residential mortgage without consent is a breach of your mortgage terms
- Check the title register before paying any fees, especially when you are under time pressure
- Wording such as “single private dwellinghouse” or “no trade or business” usually rules out holiday letting
- A covenant that blocks holiday letting may still allow a standard long-term tenancy
This case study is an illustrative scenario based on the type of cases Drake Mortgages handles. Names and identifying details have been changed or anonymised. Every case is assessed on its own circumstances, and outcomes will vary.
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